Each health reform bill in Congress achieves part of its insurance coverage expansion by increasing eligibility for Medicaid.

The latest health reform proposal, from Senate Finance Chairman Max Baucus, D-Mont., would expand Medicaid to all U.S. citizens who earn up to 133 percent of the federal poverty level (which is $14,400 for an individual and $30,000 for a family of four), beginning in 2014. Those earning 100 percent to 133 percent of poverty could take Medicaid or a private health insurance plan offered through a health insurance exchange. (The bill approved by several House committees also expands coverage to 133 percent of poverty, while the bill approved by the Senate Health, Education, Labor and Pensions Committee expands eligibility to 150 percent of poverty.)

Because Medicaid is funded jointly by the federal and state governments, there is concern that expanding the program would put significant new financial pressure on already tight state budgets. Under the Baucus proposal, the federal government would pick up more of the tab than it does now for newly eligible people (as much as 95 cents of every dollar it costs to cover these people in some areas).

What should the state's contribution be? What level of out-of-pocket payments should be required for beneficiaries, and what benefits should they receive? How should providers be paid?

4 Responses

September 22, 2009 9:48 AM

Expanding the safety-net insurance system through Medicaid is critical to reaching a large portion of the nation's uninsured, low-income working individuals and families. Bills from House of Representative committees, the Senate HELP committee, and now Senator Baucus' Chairman's Mark all provide for this essential floor of coverage. Of these, the House Ways and Means Committee proposal goes the farthest to expand coverage, protect states, and improve Medicaid primary care payment. Both the House and the Senate Finance Committee Chairman's Mark would expand coverage to 133 percent of poverty, although the House bill would start in 2013 and the Chairman's mark in 2014. According to the Congressional Budget Office, under the Ways and Means Committee health reform bill, coverage through the Medicaid program would rise by about 9 million people by 2015, and by 11 million by 2019. Because of the slower start in the Chairman's Mark, 6 million additional people would be covered by Medicaid in 2015 and 11 million by 2019.

Medicaid expansion should come with no new costs for al...

Expanding the safety-net insurance system through Medicaid is critical to reaching a large portion of the nation's uninsured, low-income working individuals and families. Bills from House of Representative committees, the Senate HELP committee, and now Senator Baucus' Chairman's Mark all provide for this essential floor of coverage. Of these, the House Ways and Means Committee proposal goes the farthest to expand coverage, protect states, and improve Medicaid primary care payment. Both the House and the Senate Finance Committee Chairman's Mark would expand coverage to 133 percent of poverty, although the House bill would start in 2013 and the Chairman's mark in 2014. According to the Congressional Budget Office, under the Ways and Means Committee health reform bill, coverage through the Medicaid program would rise by about 9 million people by 2015, and by 11 million by 2019. Because of the slower start in the Chairman's Mark, 6 million additional people would be covered by Medicaid in 2015 and 11 million by 2019.

Medicaid expansion should come with no new costs for already cash-strapped states. The House bill as amended by Ways and Means leads to no new costs for states, while under the Chairman's Mark the federal government would pick up about 90 percent of the cost of those newly covered.

Under the Senate Finance Chairman's Mark and the House bill, people living below 133 percent of poverty would not have to pay a premium for their coverage. But those living above 133 percent of poverty—the new threshold for Medicaid coverage in both the Senate Finance Chairman's Mark and House bills--would pay a premium of 3 percent of income in the Senate Finance bill. This premium exceeds the more affordable 1.5 percent of income, or not more than $444 a year, in the House bill.

The House bill calls for innovative payment approaches in Medicaid, such as improved reimbursement for primary care. And the Chairman's Mark includes a provision for a Centers for Medicare and Medicaid Services (CMS) Center for Innovative Payment that would test and evaluate new models of delivery and payment targeting beneficiaries that are dually eligible for Medicare and Medicaid. Such reforms will help to contain costs while we simultaneously cover more Americans.

September 21, 2009 5:41 PM

When I served on the Medicaid Commission from 2005-2006, one of the messages we frequently heard from Medicaid recipients who testified was that they wanted the dignity of private health insurance.

Many felt confined to a Medicaid ghetto where they had the promise of generous medical benefits on paper, but in practice, they had difficulty finding any private physicians who would see them. Too many of them were forced to go to hospital emergency rooms to get even routine care.

Why on earth would we want to expand this program to confine millions more people to this substandard access?

The Medicaid program also is rife with fraud, as documented by the Government Accountability Office and the Inspector General at the Department of Health and Human Services, as I recounted in my testimony in a 2008 hearing before the House Energy and Commerce Committee,Subcommittee on Health.

And expanding Medicaid to people up to 133% of poverty disadva...

When I served on the Medicaid Commission from 2005-2006, one of the messages we frequently heard from Medicaid recipients who testified was that they wanted the dignity of private health insurance.

Many felt confined to a Medicaid ghetto where they had the promise of generous medical benefits on paper, but in practice, they had difficulty finding any private physicians who would see them. Too many of them were forced to go to hospital emergency rooms to get even routine care.

Why on earth would we want to expand this program to confine millions more people to this substandard access?

And expanding Medicaid to people up to 133% of poverty disadvantages the most vulnerable Medicaid recipients, most of whom have no other options for care, because they now must compete for dollars and benefits with millions more people.

Finally, the proposal to provide a larger federal match to states as they add people to Medicaid who are higher up the income scale is exactly the opposite of what we should be doing. The federal government should provide a more generous match to states for covering the poorest citizens and scale back the match as they add people further up the income scale to Medicaid.

As fellow Medicaid Commissioner Bob Helms of the American Enterprise Institute explained in his dissent to our commission report, “there is an inverse correlation between poverty rates and federal per-capita Medicaid reimbursement. States with the highest poverty rates--such as Alabama, Louisiana, and Mississippi--received much lower Medicaid payments per-capita than did wealthier states like New York and several New England states.”

Congress should head back to the drawing board on Medicaid reform. While millions of people rely on Medicaid and it is a vital safety net for many, expanding this program, which is greatly in need of reform, is not the way to provide coverage to millions more Americans. Providing direct credits to allow them to purchase the private coverage of their choice is a much better option.

September 21, 2009 3:08 PM

President and CEO, National Center for Policy Analysis, and Kellye Wright Fellow

Why would anyone want to expand Medicaid? Do the commentors here harbor some fiendish desire to punish people?

One study found that the uninsured were able to get a doctor’s appointment quicker than Medicaid patients. American Cancer Society research shows that in terms of delays in the detection and treatment of cancer, Medicaid enrollment is only marginally better than being uninsured. June and Dave O’Neill found that mortality among Medicaid enrollees is significantly higher than for the uninsured.

If all this is not bad enough, expansion of Medicaid eligibility causes people to drop their private coverage (which allows them access to a broad array of providers) in order to join the public plan (where access is much more narrow). On the average, every $1 increase in Medicaid spending leads to a 50¢ to 75¢ contraction in private spending.

September 21, 2009 8:49 AM

The Medicaid expansion contained in the various health reform bills is a key and laudable component of expanding health care coverage. It makes abundant sense to establish a nationwide Medicaid eligibility floor of 133 percent of the federal poverty level – eligibility that would cover three-person families, as an example, with annual incomes below $24,352.

Today, in half the states, parents in three-person households earning more than $12,268 a year are considered “too rich” to qualify for Medicaid. The proposed expansion will not only help the very low-income parents, but it will help their children as well: Expanding Medicaid will allow all poor parents to get health coverage in the same health plan as their children, thereby increasing the likelihood that children will be enrolled in coverage they may be eligible for but are not receiving today.

For adults without dependent children, this Medicaid expansion is at least as significant. In 42 states, those non-parental adults are currently ineligible for Medicaid even if they are penn...

The Medicaid expansion contained in the various health reform bills is a key and laudable component of expanding health care coverage. It makes abundant sense to establish a nationwide Medicaid eligibility floor of 133 percent of the federal poverty level – eligibility that would cover three-person families, as an example, with annual incomes below $24,352.

Today, in half the states, parents in three-person households earning more than $12,268 a year are considered “too rich” to qualify for Medicaid. The proposed expansion will not only help the very low-income parents, but it will help their children as well: Expanding Medicaid will allow all poor parents to get health coverage in the same health plan as their children, thereby increasing the likelihood that children will be enrolled in coverage they may be eligible for but are not receiving today.

For adults without dependent children, this Medicaid expansion is at least as significant. In 42 states, those non-parental adults are currently ineligible for Medicaid even if they are penniless. For the first time, therefore, health care reform will ensure that the Medicaid health safety net applies to all poor Americans.

While the bills are on the right track, there are some key issues that need to be resolved to ensure that the poorest of the poor truly receive the coverage and care that they need.

One key issue is timing: When will the Medicaid improvements be implemented? The bill to be considered by the Finance Committee delays that implementation until 2014 – later than the other coverage expansions. It makes little sense to isolate the poor for later help, both because they need such help the most and because it leaves the critical Medicaid expansion more vulnerable to further delay or possible evisceration.

Those in Medicaid are most in need of adequate coverage. The Finance Committee proposal, however, provides coverage at the “bronze” level, thereby providing newly eligible low-income Medicaid enrollees with the least generous coverage contemplated in the bill, and less than is guaranteed to those with higher incomes who get coverage through exchanges. This inequity should be corrected.

Medicaid payment levels to primary care physicians also need to be improved so that Medicaid enrollees have a realistic opportunity to secure treatment from health providers. The House and Senate HELP Committee bills include a provision that would increase reimbursement rates for primary care services delivered by physicians serving Medicaid patients. This provision is key to making sure that a Medicaid card is not an empty promise.

Finally, the federal government – not the states – should take responsibility for the additional costs of this new coverage expansion. States have struggled with the costs of Medicaid for many years. If the expansion requires states to pay significant amounts, it is predictable that they will seek savings in other ways, by cutting benefits, reducing provider rates, and inhibiting outreach and enrollment – thereby leaving many new eligible people without the coverage and access to care that Congress had laudably enacted.

For health reform to be successful, it needs to build a strong, solid foundation of coverage for the lowest-income Americans, and strengthening Medicaid is essential towards that end.

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